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In a much needed victory, IBM Corp. has landed a massive nine-figure contract to help Columbia Pipeline Group Inc. upgrade its infrastructure and internal employee support operations over the next five years to take advantage of the new trends in the data center. That encompasses all the most important elements of the technology stalwart’s growth strategy, including cloud computing, analytics and mobility.
The $180 million agreement is dwarfed by the two $1.25 billion outsourcing deals that Big Blue struck with Deutsche Lufthansa AG and Dutch banking giant ABN AMRO late last year, but comes as a welcome boost nonetheless amid declining demand for its services. Its consultancy business saw revenue dip over eight percent last quarter, while professional services dropped more than seven.
That reflects a much broader decline in the company’s traditional core businesses that has been dragging down its top line for the last three years, costing tens of thousands of employees their jobs and leading CEO Virginia Rometty to shift billions in R&D investment to a small handful of growth areas. The deal with Columbia at once provides a shot in the arm of its services business and reinforces that investment.
The agreement will see IBM help the gas transportation giant, which separated from its former parent company and Fortune 500 member NiSource Inc. earlier this month, move its applications off the aging infrastructure it gained as part of the spin-out to its Columbia data center. Much of the work will focus on severing the remaining ties between the two networks.
Considering the sheer volume of data that will have to be manually located, checked against compliance requirements and then moved, it’s not hard to see why the two sides see the job takingfive years. On top of that, IBM will also provide Columbia Pipeline with help desk, mobile device management and other manner of services meant to help support internal users in addition to security and analytics software.
Those individual add-ons more than likely to exceed the duration of the contact given how long such large organizations tend to stick with a software solution, mainly due to the complexity of migrating to an alternative. That rings even more true for the hosting element of the deal, which means that the value of the contract has the potentially to far exceed the initial $180 million price tag over time.
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